Homework hmwk 6 Score 0 of 1 pt Problem 48 similar to Save 3

Homework: hmwk 6 Score: 0 of 1 pt Problem 4-8 (similar to) Save 3 of 6 (0 complete) Hw Score: 0%, 0 of 6 pt Question Help Evaluating liquiaity) The Tabor Sales Company had a gross profit margin (gross profits sales) of 30.4 percent and sales of $9.1 milion last year. Seventy-five percent of the firm\'s sales are on credit and the remainder are cash sales. Tabor\'s current assets equal S2.3 million, its current liabilities equal S286,000, and it has $99,000 in cash plus marketable securities. a. If Tabor\'s accounts receivable are $562,500, what is its average collection period? b. If Tabor reduces its average collection perlod to 23 days, what will be its new level of accounts receivable? C. Tabor\'s inventory turnover ratio is 9.4 times. What is the level of Tabor\'s inventories? a. If Tabor\'s accounts receivable are $562.500, its average collection period isdays. (Round to two decimal places.)

Solution

Net credit sales = Total Sales x 75% credit sales = 9100000 x 75% = 6825000

Average collection period = (Account receivable / Net Credit sales) x 365

Average collection period = (562500/6825000) x 365

Average collection period = 30.08 days